There is a distinct movement in the business world from e-business to services. Learn about the trends causing this movement and how to use services digitization and services blueprints to help your company get ahead.

This chapter is from the book

This chapter is from the book

Today, the state of the art in business technology is moving from the
pioneering efforts of e-business to a more complex theme of services
digitization. Services digitization is the ongoing transformation of paper-based
transactions into new integrated multi-channel processes. Services digitization
may seem like just another "hot fad." Peering closer, however, you
will find a significant difference: Digitization does not center on technology,
but rather on capturing value through improved productivity and performance.
Digitization gives every company the ability to reallocate their resources
totally.

In this chapter, we set the stage for the rest of the book. We begin by
looking at the five business, technology, and management trends that are causing
the migration from e-business to services. We then show that services
digitization is a concrete strategy that leading companies are executing against
using the concept of a services blueprint. We illustrate the logic behind a
services blueprint with two in-depth best-practice case studies of GE and
Wal-Mart.

Introduction

We are often asked the questions: Is e-business over now that the dot-com
bubble burst? Are we going back to the old ways of doing business? We
don't think so. The changes set in

motion by the Internet are irreversible and will take time to diffuse through
organizations. Migrating from old to new ways of conducting business is a
continuous, open-ended process. It's not a journey your company can opt out
of if you hope to remain competitive.

The transformation of twenty-first century business is under way. At the
heart of this wide-ranging transformation is the use of technology to digitize
complex services. Some firms like Intel are well into this journey. Intel's
mission is to be a worldwide, 100 percent e-corporation. This five-year effort
began in 1999 with Intel selling products online, shooting to more than $1
billion in online sales per month within the first year. Since then,
Intel's digitization efforts have expanded, and Web-based services are the
preferred method for operating and conducting business with its customers,
suppliers, and employees worldwide.1

Other firms are doing the same. They are systematically creating new services
by rewiring and integrating existing business processes. Consider the following
examples:

GE is saving billions of dollars by improving and digitizing various
sales, general, and administrative (SG&A) processes while some of its
competitors flounder. Is GE's strategy of moving back-office services (call
centers, payment processing) to India and China dramatically lowering overhead
costs?

HSBC Holdings PLC, a Hong Kong-based financial services firm, is thriving
and buying U.S. banks while its peers lay off thousands. Do its sophisticated
global financial operations, linked by advanced network technology, allow it to
keep costs under control?

Southwest Airlines is able to control its operating costs, despite all
the turbulence in the airline sector, while competitors struggle and declare
bankruptcy. Has Southwest's strategy of continuously digitizing core spend
management and customer-facing processes separated it from the rest?

Eastman Chemical is able to digitize its supply network and lower raw
material costs while its peers in the chemical industry suffer from high costs.
Is the lack of effective supply chain management one of the root causes leading
to the poor performance of its peers?

Amazon.com is thriving by becoming the online service channel for big
retailers like Circuit City, Target, Office Depot, Toys "R" Us, and
Nordstrom. Are the retailers implicitly acknowledging that Amazon.com can
digitize processes (order-to-return, target-to-engage) better than they
online?

What makes some companies so much better at new services design and
digitizing business processes than their competitors? What business trends are
they seeing that others are not able to perceive? How are they leveraging
technology? What unique process, application, and infrastructure capabilities
are they developing? These are the questions that form the basis of this book.
Are they relevant? Well, just look around you. Market leaders in every industry
are quietly incorporating as much digital technology into their products,
processes, and services as possible. These firms are beginning to see financial
resultsbetter operating margins and lower costswith the added plus
of real-time interaction with the customer.

Clearly, the nature of competition is morphing, but how and why some firms
are better at evolving into digital companies is not fully understood. What
is known is that the macroeconomic transformations taking place are real
and profound. Due to customer pressure, organizations are transitioning to a
multi-channelbrick, Web, mobile, and teleservices economy. However,
there are many emerging perspectives on services. Some view it as a technology
issue (Web Services). Some view it as an online process issue (e-services). Some
view it from the customer perspective (value). All these views are relevant and
pertinent. We need a frameworka services blueprintthat ties all of
these viewpoints together. Not having a clear services blueprint invariably
leads to suboptimal decisions that waste time and resources.

Before we talk about the services blueprint, how can we be sure that the
trends are pointing toward services? This is an important issue, as it lays the
foundation for the rest of the book.